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Page added on March 24, 2014
US could start energy war with Russia
Debate has raged over whether the United States can fight Vladimir Putin on the Russian president’s most favourable ground: energy politics. It can, and it should, particularly because there’s an obvious path forward that coincides with American — indeed, world — economic interests. That path is lifting irrational restrictions on exports and making it easier to build natural gas export terminals.
For years, Putin has used his nation’s wealth of oil and natural gas as a cudgel to bully his neighbours. At present, the European Union’s large imports of Russian natural gas discourage a forceful Western response to Russia’s aggressive actions in Ukraine. Meanwhile, the United States is tapping massive reserves of unconventional natural gas. That has not only made the U.S. self-sustaining in gas, but also driven down the price of U.S. gas to a point well below what Europeans are paying for the Russian stuff. If the federal government allowed more of it to be liquefied and exported, would the Russians lose a share of the European market?
The story is more complicated than that. Russian gas, which doesn’t need to be liquefied to move (by pipeline) into the European market, would enjoy significant price advantages over imported U.S. gas. The interaction of private buyers and sellers would probably direct U.S. exports to places where gas is more profitable to sell, such as Japan and Korea. The result would be a bounty for the U.S. economy and an improved American trade deficit — but not much direct displacement of Russian gas in Europe.
But that’s also not the end of the story. The U.S. entry into the Asian market would diminish Russia’s opportunity to profit there, as it aims to do. Contributing to an already widening and more diverse global supply of liquefied natural gas (LNG) would also give European importers more flexibility in sourcing their fuel — from the United States, Qatar, or others — the sort of market conditions that have already enabled Europeans to renegotiate gas contracts with Russia. The Council on Foreign Relations’ Michael Levi points out that Putin might end up with an uncomfortable choice between maintaining market share in Europe and slashing his prices more.
Ramping up U.S. exports would take years, but the effects would not only be long-term, as some critics charge. Action that communicates a certain intent to allow more LNG exports would send a signal that “the U.S. is open for business,” as the Eurasia Group’s Leslie Palti-Guzman puts it. That could deter Putin from playing the energy card and help many buyers in negotiating long-term contracts.
The economic case for allowing natural gas exports is compelling on its own. Doing so would bring money into the country and uphold the vital principle that energy resources should flow freely around the globe, making the markets for the fuels the world economy needs as flexible and robust as possible. The more major suppliers there are following that principle, the less control predatory regimes such as Putin’s will have over the market.
17 Comments on "US could start energy war with Russia"
Ming on Mon, 24th Mar 2014 5:27 pm
I hope the writer of this piece invests all his savings into those LNG export facilities…
Subjectivist on Mon, 24th Mar 2014 5:40 pm
Lol, Ming that would be the most “fitting” reward I can imagine. Excellent!
GregT on Mon, 24th Mar 2014 5:50 pm
Sounds like the cold weather in Winterpeg is having an effect on brain function.
Arthur on Mon, 24th Mar 2014 6:13 pm
For years, Putin has used his nation’s wealth of oil and natural gas as a cudgel to bully his neighbours.
The author does not care to elaborate on the exact nature of the ‘bullying’. Yes, Russia did close down the pipeline, when the Ukraine illegally tapped or forgot to pay the bill, like any sane supplier would do.
The US in 2012 still had a net NG import of 6% of total consumption:
http://www.eia.gov/naturalgas/importsexports/annual/
Not entirely sure with what the US intends to start an ‘energy war’ with Russia. With bombs perhaps?
antaris on Mon, 24th Mar 2014 6:19 pm
GregT you are probably right about the cold. Imagine some frozen Canadian copying the Washington Post,where were their brains.
DC on Mon, 24th Mar 2014 6:49 pm
Embarrassing, but a lot of the stuff that falls of ‘Canadians’ mouths on this issue, is very out of touch with the real feelings of most folks in this matter. Very few Canadians, some do to be sure, think this way, or anything remotely like it. Besides, one has to ask, why would a ‘Canadian’ advocate a hostile foreign imperial power, (the United snakes), engage in ‘warfare’ against another nation that few Canadians, outside the usual uS sympathizers, have much of problem with? Article positively reeks of planted agit-prop.
paulo1 on Mon, 24th Mar 2014 7:10 pm
Embarrasing to be a Canadian this morning. I know, let’s get him.
Paulo
andya on Mon, 24th Mar 2014 7:38 pm
This is great, the US should sell all its gas overseas. That will teach Putin who is the BOSS. Then when Americans are freezing because all the gas is being exported and they can’t afford it, Putin will be so terrified he may just curl up and die. Even better would be to sell all the oil in the SPR, what else can the US sell?
The authors of this crap have been taking marketing for monopolies 101, undercut the competition. Yet they are too dumb to realise that the US don’t have a monopoly, and Russia is not competition. It’s not a race to see who can sell all of their product first. The stupidity on display here is amazing.
Boat on Mon, 24th Mar 2014 7:39 pm
Any country wanting to import from an unstable energy source is just asking for future problems. Look at Europe now.
rockman on Mon, 24th Mar 2014 8:57 pm
Maybe it’s just because our playful editors like messing with us but all these ideas about the great US “energy weapon” we could unleash against Putin are getting a bit much. It’s as if instead of dealing with mass hysteria we have to deal with mass ignorance. I can appreciate how some of the technical details might be beyond the grasp of many in the MSM. But this constant drum beat that the US is energy independent and could export enough oil/NG to make Putin suffer is just too much.
Arthur on Mon, 24th Mar 2014 8:59 pm
Look at who is making energy supply instable? Those who can’t leave Ukraine and Russia alone.
http://borden.plaatsengids.nl/p304/IMG_0999nuland.jpg
DC on Mon, 24th Mar 2014 9:25 pm
LoL good one Art!
jjhman on Mon, 24th Mar 2014 9:31 pm
And after this “energy war” has been won by the great moral leader USofA Russia will still own the Crimea, just as it has since Catherine the Great took it into the Russian Empire. That was before there was a USofA.
I don’t recall if any of the independent states which had signed the Articles of Confederation complained to Catherine.
westexas on Mon, 24th Mar 2014 11:52 pm
If the US boosted crude oil imports from Russia by 2 mbpd, we could then export 2 mbpd of crude oil to Europe.
Makati1 on Tue, 25th Mar 2014 2:40 am
Well covered guys! Cannot add anything to your observations. This is one more example of the spread of US insanity to the north.
Bob Owens on Tue, 25th Mar 2014 2:04 pm
Truly breathtaking! Let’s spend hundreds of billions on building LNG terminals and ships to ship gas overseas! Or, we could take that same money and invest in solar and never have to import or use any of our fossil fuels, ever! Let me see now, what makes sense? Gee, I can’t figure it out!
J-Gav on Tue, 25th Mar 2014 3:27 pm
You Canadians must know the old joke: In Winter, a guy living in Ottawa announces to his wife he has to make a business trip to Winnipeg. She says: “Must be cold out there. Wear the fox hat.”
He says: “Oh, somewhere out in the south-central part of the country.”
Not to pick on Winnipeg, which may be a pleasant town as far as I know but, yes, this article is a bit weird.